Coalition Sues to Protect Public Service Loan Forgiveness Program

Coalition Challenges New PSLF Rule, Citing Unconstitutional Impacts on Public Service Workers

November 3, 2025 | BOSTON — In a significant legal move, a coalition comprising more than a dozen cities, labor unions, and nonprofit organizations has launched a lawsuit against the U.S. Department of Education (ED). The focus of the lawsuit is the Trump-Vance Administration's recent amendments to the Public Service Loan Forgiveness (PSLF) program, which the coalition argues unlawfully target organizations and individuals engaged in public service.

The plaintiffs in the lawsuit include the cities of Albuquerque, Boston, and Chicago, among others, as well as a range of professional and advocacy groups like the American Federation of Teachers and the National Council of Nonprofits. The legal representation for this coalition is provided by Protect Borrowers and Democracy Forward, while the County of Santa Clara and the City and County of San Francisco are representing themselves.

According to the lawsuit, the new PSLF rule potentially undermines the workforce in public service sectors by threatening debt relief for workers if their cities adopt policies contrary to those favored by the Trump-Vance Administration. This concern affects professions such as teaching, firefighting, and healthcare.

AFSCME President Lee Saunders emphasized the potential impact of these changes, stating, “The Public Service Loan Forgiveness program allows nurses, first responders, corrections officers, school staff and more to support their families while serving their communities. Gutting this program will worsen the public service staffing crisis while weakening the essential services communities rely on. We’re filing this lawsuit to protect the Public Service Loan Forgiveness program so working people can continue to afford to serve their communities in the jobs they love.”

Democracy Forward's President and CEO, Skye Perryman, criticized the administration's actions, saying, “This administration has, yet again, unlawfully targeted people who work in the public interest. And so we again are in court. Politically motivated retaliation, like what the administration has done here, should have no place in America. We are honored to represent this powerful coalition in defense of the people’s rights.”

The lawsuit asserts that the rule violates the Higher Education Act (HEA), which clearly states that government and 501(c)(3) nonprofit employers qualify for PSLF participation. It further claims that the rule infringes on First Amendment rights by selectively denying loan forgiveness to employees of organizations opposed by the administration, such as those aiding immigrant or LGBTQIA+ communities.

Persis Yu, Deputy Executive Director and Managing Counsel at Protect Borrowers, expressed strong opposition, declaring, “ED’s PSLF rule is an illegal attempt to weaponize the federal government against its own people. The Trump-Vance Administration is telling a generation of dedicated public servants that their work only counts if it aligns with a MAGA political agenda. This betrays the nonpartisan promise of PSLF and the core principles of our nation. They are silencing dissent and trying to dismantle the very institutions that hold power accountable. We will not let this stand.”

The coalition seeks judicial intervention to nullify the rule, asserting that it deviates from the original bipartisan intent of the PSLF program, which was to support individuals dedicated to public service without political bias.

For more detailed statements from the co-plaintiffs, please click here.

The full lawsuit document, National Council of Nonprofits et al. v. McMahon, is accessible here.